nep-ent New Economics Papers
on Entrepreneurship
Issue of 2009‒03‒28
ten papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Disagreements and Intra-Industry Spinoffs By Peter Thompson; Steven Klepper
  2. Entrepreneurship in Developing Countries By Zoltan Acs; Nicola Virgill
  3. Creative Industries, New Business Formation and Regional Economic Growth By Roberta Piergiovanni; Martin Carree; Enrico Santarelli
  4. Export-Driven New Ventures and Economic Growth By Jolanda Hessels; André van Stel
  5. Determinants and dimensions of firm growth By Gerrit de Wit; Haibo Zhou
  6. Venture Capital and Sequential Investments By Dirk Bergemann; Ulrich Hege; Liang Peng
  7. Determinants of the Innovation Propensity in Tunisia: the Central Role of External Knowledge Sources By Mohamed Ayadi; Mohieddine Rahmouni; Murat Yildizoglu
  8. SME Access to Credit in Guatemala and Nicaragua: Challenging Conventional Wisdom with New Evidence By Ricardo Bebczuk
  9. Designing your future business model: An activity system perspective By Zott, Christoph; Amit, Raphael
  10. EU Enlargement under Continued Mobility Restrictions: Consequences for the German Labor Market By Brenke, Karl; Yuksel, Mutlu; Zimmermann, Klaus F.

  1. By: Peter Thompson (Department of Economics, Florida International University); Steven Klepper (Department of Social and Decision Sciences, Carnegie Mellon University)
    Abstract: A growing empirical literature on spinoff formation has begun to reveal some striking regularities about which firms are most likely to spawn spinoffs, when they are most likely to spawn them, and the relationship between the quality of the parent firm and its spinoffs. Deeper investigations into the causes of spinoffs have highlighted the importance of strategic disagreements in driving some employees to resign and found a new venture. Motivated by this literature, we construct a new theory of spinoff formation driven by strategic disagree-ments, and explore how well it explains the emerging empirical regularities.
    Keywords: Spinoffs, learning, strategic disagreement
    JEL: L2 D70 D83
    Date: 2009–03
  2. By: Zoltan Acs (George Mason University); Nicola Virgill (George Mason University)
    Abstract: This paper reviews the literature on economic development from import substitution to export promotion. It then examines the literature on entrepreneurship and economic development creating a framework for promoting development through demonstration effects, knowledge and information externalities and network externalities. It finished with an examination of public policies.
    Keywords: Development, export substitution, export promotion, public policy
    JEL: L26 O10
    Date: 2009–03–25
  3. By: Roberta Piergiovanni (Istat-Ufficio Regionale per l’Emilia-Romagna); Martin Carree (Maastricht University); Enrico Santarelli (University of Bologna and Max Planck Institute of Economics)
    Abstract: The present study explores the impact exerted by a series of factors and processes including creativity, IPR activities, new business formation and the provision of amenities on economic growth for 103 Italian provinces (NUTS 3) over the period between 2001 and 2006. Provincial growth rates are measured alternatively by value added growth and employment growth. Findings show a positive effect of the increase in the number of firms active in the creative industries, net entry, and a greater provision of leisure amenities on regional economic growth. A large portion of employment in the manufacturing, mining, and energy sector, and a high relative number of university faculties are found to lead to slower economic growth, whereas trademarks, patents, cultural amenities and industrial districts do not affect economic growth. Finally, the share of legal immigrants is found to have a positive impact on employment growth.
    Keywords: regional growth, creativity, entrepreneurship, Italian provinces
    JEL: O18 O34 R11
    Date: 2009–03–18
  4. By: Jolanda Hessels; André van Stel
    Abstract: In this paper the relationship between a country’s prevalence of new ventures and its rate of economic growth is investigated, while distinguishing between export-oriented new ventures and domestic new ventures. It is generally acknowledged that new venture creation as well as export activity may both be important strategies for achieving national economic growth. However, to our knowledge no attempt has been made to empirically investigate the role of export-driven new ventures in economic growth. We focus on the national level and use data for a sample of 36 countries that participated in the Global Entrepreneurship Monitor in 2002. Our results suggest that a country’s prevalence of export-driven new ventures is significantly positively related to economic growth, whereas the prevalence of new ventures that focus exclusively on domestic market sales shows no significant relation to national growth..
    Keywords: entrepreneurship, export, international new ventures, economic growth, Global Entrepreneurship Monitor
    JEL: F23 L25 L26 O47 O57
    Date: 2009–03
  5. By: Gerrit de Wit; Haibo Zhou
    Abstract: Firm growth is an important indicator of a thriving economy. Although the determinants of firm growth have been studied in various disciplines, an integrated analysis is still lacking. This paper attempts to provide such an analysis. Many determinants of firm growth are summarized and classified into three dimensions: individual, organizational, and environmental determinants. By conducting an empirical study using 523 Dutch small and medium sized firms, we identify the determinants of firm growth which is measured by employment growth. Our findings show that environmental determinants do not affect firm growth. Individual ones do: entrepreneurs with growth motivation and having technical knowledge are more likely to grow their firms while entrepreneurs characterized by a strong need of achievement are less likely to engage in firm growth. Organizational determinants have the most influence on firm growth: the older thefirm, the less likely it is to grow. Availability of financial capital is found to be crucial to firm growth. Finally, the firm’s scalability (its preparedness to grow) is found to have a positive impact on firm growth.
    Date: 2009–03–17
  6. By: Dirk Bergemann (Cowles Foundation, Yale University); Ulrich Hege (Dept of Finance and Economics, HEC School of Management); Liang Peng (Leeds School of Business, University of Colorado)
    Abstract: We present a dynamic model of venture capital financing, described as a sequential in­vestment problem with uncertain outcome. Each venture has a critical, but unknown threshold beyond which it cannot progress. If the threshold is reached before the completion of the project, then the project fails, otherwise it succeeds. The investors decide sequentially about the speed of the investment and the optimal path of staged investments. We derive the dynamically optimal funding policy in response to the arrival of information during the development of the venture. We develop three types of predictions from our theoretical model and test these predictions in a large sample of venture capital investments in the U.S. for the period of 1987-2002. First, the investment flow starts low if the failure risk is high and accelerates as the projects mature. Second, the investment flow reacts positively to information that arrives while the project is developed. We find that the investment decisions are more sensitive to the information received during the development than to the information held prior to the project launch. Third, investors distribute their investments over more funding rounds if the failure risk is larger.
    Keywords: Venture Capital, Sequential investment, Stage financing, Intertemporal returns
    JEL: D83 D92 G11 G24
    Date: 2008–10
  7. By: Mohamed Ayadi (ISG - Institut supérieur de gestion - Université de Tunis, Ecole Supérieure des Sciences Economiques et Commerciales de Tunis - Université de Tunis, GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Mohieddine Rahmouni (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - CNRS : UMR5113 - Université Montesquieu - Bordeaux IV); Murat Yildizoglu (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales - CNRS : UMR6579)
    Abstract: This article is dedicated to the analysis of the first innovation survey of the Tunisian firms. Starting from basic mechanisms of innovation processes, we test a set of conjectures adapted to a developing country like Tunisia. We analyze the motivation of firms to innovate and the determinants of product and process innovations. Our results show that firms must benefit from external knowledge sources in order to exhibit significant innovation propensities. The large size is also a necessary (but not sufficient) condition for innovation. We also notice that the participation of the State plays an harmful role.
    Keywords: Innovation; development; absorptive capacity; learning
    Date: 2009–03–16
  8. By: Ricardo Bebczuk (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata)
    Abstract: This paper develops a conceptual framework and offers new statistical evidence on the access to credit by micro, small, and medium enterprises (MSMEs) in Guatemala and Nicaragua. To this end, and after reviewing the existing literature on the topic, it produces new empirical evidence drawn from the official Household Survey and the World Bank’s Investment Climate Survey, conducted in both countries in 2006. The core contribution of the paper lies in the critical revision of three pieces of common knowledge, namely: (1) A large fraction of MSMEs has an excess demand for credit; (2) In the presence of credit market failures, governments must and actually do assist MSMEs in gaining access to loan facilities; and (3) Alternative credit instruments, such as leasing, factoring, microcredit, and third-party guarantee schemes, can be a suitable and massive solution for the lack of financing. Our analysis refutes to a large extent these assertions and advances some basic policy prescriptions that should help improve the resource allocation and impact of specific MSME financial programs.
    Date: 2009–01
  9. By: Zott, Christoph (IESE Business School); Amit, Raphael (The Wharton School, University of Pennsylvania)
    Abstract: Building on the received literature, we conceptualize a firm's business model as a system of interdependent activities that transcends the focal firm and spans its boundaries. The activity system enables the firm to create value in concert with its partners but also to appropriate a share of the value created. Anchored on theoretical and empirical research, we suggest two sets of parameters that activity systems designers need to consider: design elements - content, structure and governance - that describe the architecture of an activity system; and design themes - novelty, lock-in, complementarities and efficiency - that describe the sources of the activity system's value creation.
    Keywords: Business model; activity system; design;
    Date: 2009–02–07
  10. By: Brenke, Karl (DIW Berlin); Yuksel, Mutlu (IZA); Zimmermann, Klaus F. (IZA, DIW Berlin and Bonn University)
    Abstract: The numbers of migrants from the accessions countries have clearly increased since the enlargement of the EU in 2004. Following enlargement, the net inflow of EU8 immigrants has become 2.5 times larger than the four-year period before enlargement. Poles constitute the largest immigrant group among the EU8 immigrants: since enlargement, 63% of all immigrants and 71% of EU8 immigrants are from Poland. This chapter presents new evidence on the impact of immigrant flow from EU8 countries on the German labor market since EU enlargement. Unlike other EU countries, Germany has not immediately opened up its labor market for immigrants from the new member states. Nevertheless, our analysis documents a substantial inflow and suggests that the composition of EU8 immigrants has changed since EU enlargement. The majority of the new EU8 immigrants are male and young, and they are less educated compared to previous immigrant groups. We also find that recent EU8 immigrants are more likely to be self-employed than employed as a wage earner. Furthermore, these recent EU8 immigrants earn less conditional on being employed or self-employed. Our findings suggest that these recent EU8 immigrants are more likely to compete with immigrants from outside of Europe for low-skilled jobs instead of competing with German natives. While Germany needs high-skilled immigrants, our analysis suggests that the new EU8 immigrants only replace non-EU immigrants in low-skilled jobs. These results underline the importance of more open immigration policies targeting high-skilled immigrants. The current policy not only cannot attract the required high-skilled workforce, but also cannot avoid the attraction of low-skilled immigrants, and is a complete failure.
    Keywords: wages, international migration, EU enlargement, employment
    JEL: J61 F22 E24
    Date: 2009–03

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